Tuesday, October 9, 2012

MPW/Edgen Murray 2015 Bond Redemption/Bought 35 DTLK at $7.49-LT Category

A Republican Congressman from Georgia, Paul Broun, who calls himself a scientist, called "evolution" and "the big-bang" theory of creation as "lies straight from the pit of Hell". Video NBC News

The World Bank cuts its 2012 Asia growth estimate  to 7.2% from the prior forecast of 7.6% made last May.  The WB predicts 7.6% growth in 2013, down from 8% in the prior forecast.  The primary reason for the deceleration is China, whose growth is now seen at 7.7% in 2012 and 8.1% in 2013. Growth to Slow in East Asia and Pacific in 2012, But Domestic Demand Will Play Key Role in Rebound Next Year The East Asia and Pacific region's share of the global economy has grown to about 18% today from 6% two decades ago.  East Asia and Pacific Economic Data Monitor (October 2012)

FactCheck published statistical data regarding Obama's performance to date.

The latest PEW Poll has Romney four points ahead of Obama. Pew Research Center This is apparently due to Romney's debate performance and the listlessness of the President.

Among the 50 states, Tennessee had the lowest cost of living and the fourth lowest gasoline cost.  MarketWatch

1. Edgen Murray (own 12.25% Senior Secured 2015 Bond and common as a LT): Edgen Murray Corporation (EMC), an indirect subsidiary of Edgen Murray (EDG), priced  a new $540M senior secured bond. SEC Filed Press Release This bears a 8.75% coupon and matures in 2020. The proceeds will be used to retire EMC's 12.25% senior secured note, which I own now. Edgen Group Announces Proposed Refinancing Plans and Updated 2012 Guidance 

I received notice of a tender for the 2015 senior secured, which offered a premium for an early tender, but a tender required two bonds and I only owned one. Bought 1 Edgen Murray Senior Secured Bond Maturing 2015 at 97.5 (March 2011). Once that tender process is completed, I suspect that the remaining bonds will be redeemed as provided in the Prospectus:

Page 135, 164-165 Prospectus. 

Unless there has been some lawful change in the compensation payment for an optional redemption, I would expect to receive the full principal amount, plus accrued interest, plus a make whole payment for a redemption prior to 1/15/13. For a redemption made after 1/15/2013 and before 1/15/2014, I would receive a 106.125% premium plus accrued interest. 

I also own EDG common shares bought as a Lottery Ticket: BOUGHT 40 EDG at $7.28-LT CategoryEDG: 8.44 -0.04 (-0.47%)

2. Bought 35 Datalink at $7.49 Yesterday (Lottery Ticket Basket Strategy)(see Disclaimer): Last Friday, I noticed that the shares of Datalink fell over 13% after the company issued a warning and announced an acquisition:

Last Friday's Close: DTLK: 7.43 -1.15 (-13.40%)
Volume 805,906
Average Daily Volume 125,452

The decline placed the shares near their 52 week low of $6.94. The shares have been trading in a narrow channel, mostly between $50 to $10 since crashing in 2000 with the bursting of the Nasdaq Bubble: DTLK Interactive Chart

Datalink designs, deploys, manages, and supports solutions and services in four areas: consolidation and virtualization, data storage and protection, advanced network infrastructure and business continuity and disaster recovery solutions. 2011 Annual Report at pages 1-2 For 2011, the company reported net income of $9.845M, or $61 cents per diluted share, on revenues of $380.027M, up from 18 cents in 2010 (page 22)

Datalink Profile Page at Reuters

Datalink Key Developments Page at Reuters.

Company Website: Datalink – Maximizing the business value of IT

The acquisition involving acquiring most of the assets of StraTech from Midas Medici Group for $20.25 million which includes the issuance of 269,802 Datalink shares and $13.2M in cash. Form8-k

Datalink claims that this acquisition will increase its market share across the Eastern seaboard, including North Carolina, Florida and the Mid-Atlantic and will add an estimated $65M in annual revenues based on more than 400 additional customers. SEC Filing

The company also warned that third quarter results would fall below its prior estimate of $.20 to $.25 to an estimated range between $.14 to $.15 per shares, as customers held back on spending. Datalink Announces Closing of the Purchase of Strategic Technologies and Provides Third Quarter Guidance Update

Prior to this acquisition and earnings warning, the consensus E.P.S. forecast was for $.91 in 2012 and $1.09 in 2013. DTLK Analyst Estimates At a minimum the 2012 E.P.S. forecast would need to be reduced by 8 cents to $.82 since the third quarter consensus was $.23. It would probably be prudent to reduce the current $.29 4th quarter estimate to $.20, though that is just a guess that the deceleration is more than a quarter event. Those two changes would give me an estimated E.P.S. of $.74 in 2012 or close to 10 times earnings. Based on a $7.5 total cost per share, the forward P/E based on the 2013 estimate would be about 6.88.

Other DTLK Key Statistics include the following, based on a share price of $7.5, reported earnings through 6/30/12 and current analyst forecasts.

Price to Book: 1.54
Price to Sales: .33
Five Year Estimated P.E.G.= .33
Return on Equity= 13.65%

The Lottery Ticket Strategy is a rules based strategy. Prior to the purchase of Datalink, I had the "capacity" to use $3,019.67 to purchase stocks classified in this category. Capacity is defined to mean to the difference between my realized gains from LTs and my total current exposure:

Realized Gains=$11,299.98
Exposure as of 10/4/12 in 38 Names=$8,280.31

Yesterday's Close: DTLK: 7.50 +0.07 (+0.94%)

3. Medical Properties Trust (own-ROTH IRA): I have not discussed this stock much since my purchase of 100 shares last February. Item # 3 Bought 100 MPW at $9.9-ROTH IRA  MPW is a healthcare REIT. Initially, the stock declined some after my purchase but hit a new 52 week high yesterday.  MPW Interactive Chart  The stock has been rising since the company released second quarter results before the market opened on August 9, 2012: MPW Historical Prices In that report, MPW reported a 37% increase in second quarter normalized FFO. SEC Filed Press Release As of 6/30/12, the company had total real estate investments of approximately $2 billion comprised of 79 healthcare properties in 23 states leased to 21 hospital operating companies.

The current quarterly dividend rate is $.2 per share. Medical Properties Trust- Dividend Information

Company Website: Medical Properties Trust, Inc. (NYSE: MPW) - Welcome

Yesterday's Close: MPW: 11.01 +0.20 (+1.85%) 

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